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London open: Stocks edge up as US-China talks eyed, Qatar bails out Turkey
London stocks edged higher in early trade on Thursday as the mood lifted after Qatar came to a wobbling Turkey’s aid with a hefty investment pledge and news emerged of high level trade talks between US and China.
At 0830 BST, the FTSE 100 was up 0.2% to 7,513.05, while the pound was up 0.1% against the dollar at 1.2707 and 0.1% lower versus the euro at 1.1178.
Following a meeting with Turkish President Erdogan in Ankara on Wednesday, Qatar’s Emir Sheikh Tamim bin Hamad bin Al Thani pledged to invest $15bm in the country’s financial markets and banks. The move follows Turkey’s recent support of Qatar following a stand-off with Saudi Arabia.
Sheikh Tamim tweeted: “We stand by our brothers in Turkey that have stood with the issues of the Muslim world and with Qatar.
“Today, in the framework of important negotiations with his excellency President Erdogan in Ankara, we announced a package of deposits and investment projects worth $15billion in this country, which has a productive, strong and robust economy.”
Neil Wilson, chief market analyst at Markets.com, noted that the Turkish lira has pushed below the 6 handle against the dollar to trade at its best level since Friday.
Wilson said that while Qatar has emerged as a white knight, coming to Turkey’s rescue and easing concerns, “in the wider market the push back against the dollar’s rally seems to be the result of news China and the US will hold high level trade talks later this month”.
China’s Ministry of Commerce said on Thursday that a Chinese delegation led by vice commerce minister Wang Shouwen will travel to the US for talks in late August. The talks, which are at the invitation of the US, will be held with US Under Secretary of Treasury for International Affairs, David Malpass.
On the data front, all eyes will be on the release of UK retail sales figures for July at 0930 BST, which are expected to have risen 0.2% month-on-month after unexpectedly falling 0.5% in June.
“Whilst hopes had been high that the World Cup and hot weather would have boosted beer and BBQ sales in June, the lift didn’t materialise,” said London Capital Group analyst Jasper Lawler. “July was the knockout phase and although England did well making it through to the semis, this is unlikely to have translated into strong retail sales. The British Retail Consortium retail sales figures painted a similar picture with concerns growing for the outlook.”
In corporate news, On the Beach rallied as it announced the acquisition of Classic Collection Holidays for £20m and said it continues to expect adjusted pre-tax profit for the year to be in line with management’s expectations.
Copper miner Kaz Minerals surged as it reported a rise in first-half profit, while Marshalls racked up healthy gains as it said interim profits rose 12% despite the ‘Beast from the East’ hitting sales by £9m.
Bank of Georgia gained ground as it said first-half profit rose 11.2% as is banking and investment businesses performed well.
Going the other way, B&Q owner Kingfisher fell despite saying that sales in the second quarter were boosted by the warm weather.
Auto Trader slipped after entering into an agreement to create a joint venture with Cox Automotive UK, to provide a leading digital marketplace for wholesale vehicles in the UK.
Oil services firm John Wood Group was in the red after announcing the sale of its 50% stake in the Voreas wind farm joint venture in Italy for $27m in cash, while gambling company Rank slumped as it posted a 41% drop in full-year pre-tax profit.
On the broker note front, AstraZeneca and Petrofac were both downgraded to ‘hold’ at Jefferies, while Informa was cut to ‘equalweight’ at Morgan Stanley.
Esure was upgraded to ‘neutral’ by UBS while Hikma Pharmaceuticals was lifted to ‘add’ from ‘hold’ at Peel Hunt.
